Spotlight on: Minimum wage

Written by Antony Altbeker

Introduction

In October 2016, a panel of experts appointed by Deputy President Cyril Ramaphosa to provide advice and assistance in the formulation of policy on the introduction of a national minimum wage (NMW), made its report and recommendations public. This report will is to be discussed in Nedlac where a final decision on the NMW will be made before the relevant legislation passes through parliament. The Panel:

(1) proposes that an NMW be implemented in 2017 and that it be set at R20 per hour, the equivalent of R3,500 per month for full-time employees; and(2) estimates that this has the potential to raise the incomes of some 6.2 million people who are employed but who currently earn less than R3,500 a month.

Commentary on the proposal and the debate that preceded its presentation, reflected two familiar responses. Some commentators celebrated what they saw to be a victory over business (albeit a partial one), forcing employers to raise wages, though not, perhaps, by as much as proponents of an NMW would have hoped . Others argued that by raising minimum wages, jobs would be lost and future job creation would slow.

This report seeks to frame the issues at stake in this debate. It will do so by seeking to provide clarity on a number of issues of fact and interpretation relating to the proposed NMW. It does so by providing answers to 12 key questions anyone with an interest in this subject should understand. The questions, listed on the right of the scree, begin by setting out exactly what the Panel proposes (questions 1 through 8), before offering an analysis of what CDE believes to be the recommendations’ key weakness: an overhasty and unpersuasive dismissal of concerns that the implementation of its recommendations risks large-scale job destruction both in the short and long terms. This is a risk CDE believes that a country in which nearly 40% of the potential workforce is unemployed should not take, and we urge all interested parties to rethink their approach to these issues.